The economic pressure on the travel industry today has never been greater. With rapidly rising fuel prices, increasing regulations, and ticket price commoditization, operators are constantly in search of opportunities to reduce operating costs and develop new approaches for profitable revenue generation.
Airline operators, for instance, first discovered ancillary revenue opportunities through advertising sales in their branded on-board magazines and buy-on board programs involving duty-free goods. This eventually spread to online bookings and self-check-in options. Today, airlines are using their web sites to sell seats, insurance, car rentals and hotel reservations. Others have extended this buying to on-board programs to provide a la carte meals and drinks, lottery tickets, phone cards, on-demand entertainment, and more. With the coming of on-board Wi-Fi communications airlines will soon be in a position to reap more profits from their captive audiences than ever before.
Average shopping time is 20 minutes in traditional retail environments, whereas typical time consumed by each flight leg can be 1-12 hours, with average travel time of 7 to 9 hours if pre- and post-flight time is added. Although the opportunity to tap the market of in-transit passengers has been known for decades, a number of particular challenges has prevented deployment of a commercial infrastructure to in-transit passengers. For example, crew personnel are not retail sales staff and would need to be trained to acquire retail sales skills. Also, there are practical difficulties in transacting with customers who are passengers seated throughout the airplane. Furthermore, importantly, the retail environment in a moving vehicle is dynamic, meaning that the inventory and services available for purchase are entirely dependent on the unique characteristics of each flight leg.
Different aircraft have different sizes and configurations; thus, the products and services that can be purchased vary by vehicle type. Also, the routes taken by aircraft make the on-board retail environments subject to different legal standards. For instance, duty-free shopping is available on international routes but not on domestic routes. Furthermore, the suppliers or vendors of products made available for on-board delivery differ by location, such that certain products are available to be stocked on-board at some departure points, but not others. Presently, the few items that airlines offer their passengers for sale on-board are listed in the back of the airlines' magazines, along with a disclaimer that selection varies by flight and to inquire further with the flight attendant. Meanwhile, the flight attendants are busy distributing food and drinks, collecting items for the trash, and otherwise carrying out their primary responsibilities and helping other passengers. Thus, passengers who would otherwise be retail customers are oftentimes dissuaded by etiquette or other social norms from bothering the flight attendants to request their service to make a purchase.
Present day in-flight sales are plagued with other difficulties and inefficiencies. Purchasing a product that is as simple as a mixed drink or a particular beverage for purchase, may require the flight attendant to first search for the bottle or mix ingredients, which could involve checking his or her food or drink cart, checking with other flight attendants, and possibly checking any additional inventory in the vehicle's galley. Too often, by the time the flight attendant reaches the later rows in the course of delivering regular service, the selection of products is depleted to a very limited assortment. Collecting payment for the purchase of a product presents a whole host of other challenges, such as making change and, if credit card transactions are facilitated, completing the transaction and reconciling payment through the usual banking channels in a timely and secure manner. Pre-ordering of special items is generally handled by airlines through their ticketing agents, and is typically limited to specific special needs items handled in small volumes on a case-by-case basis.
Another factor specific to mobile retail is that passengers are often on a travel itinerary having stopovers or changeovers, such that the particular flight on which a given passenger may be enticed to make a purchase is not the final leg of that passenger's travel. In this scenario, for items purchased on-board to be delivered at the destination point, the inventory from which a passenger may shop is unique to the passenger's itinerary.
These are just a few examples of how retailing on board transportation vehicles turns the typical retailing model upside-down. Generally speaking, for physical, store-based retailers, the typical basic business model involves numerous product (SKU) types for a relatively smaller set of physical store types. In contrast, for on-board retailing, the typical business model involves a relatively smaller set of SKU types for numerous virtual store types. The implications of these differences are multi-fold. The key impacts lie in merchandise management, supply chain planning and supply chain execution. The merchandise management function of a typical retailer focuses on product categories and even as far down to individual SKUs (and, for example, size, colors, etc.) and therefore it generally organizes its merchandising skill sets around product categories and products. However, on-board retailing completely changes this structure. Merchandising skill sets need to be organized around stores, not products and in this case, specifically around ‘virtual stores’. This creates a need for unique merchandising management, supply chain planning and supply chain execution technologies to support this different organization structure and these different skill sets.
Various techniques have been proposed to automate and organize in-flight activities, such as bathroom reservations (e.g., U.S. Pat. No. 7,535,367), in-flight personal entertainment (U.S. Pat. Pub. No. 2003/0229897), travel services dispatch and advertising (U.S. Pat. No. 6,882,290). A variety of point-of-sale systems facilitating on-board sales has also been proposed that addresses some of the challenges mentioned above. However, to-date, no comprehensive solution that practically enables widely-deployed and reliable retail services for moving vehicles has been presented.